BILL NUMBER: AB 1687	CHAPTERED  09/21/99

	CHAPTER   453
	FILED WITH SECRETARY OF STATE   SEPTEMBER 21, 1999
	APPROVED BY GOVERNOR   SEPTEMBER 21, 1999
	PASSED THE ASSEMBLY   AUGUST 26, 1999
	PASSED THE SENATE   AUGUST 23, 1999
	AMENDED IN SENATE   JULY 12, 1999
	AMENDED IN ASSEMBLY   APRIL 22, 1999

INTRODUCED BY   Committee on Banking and Finance (Papan (Chair), Cox
(Vice Chair), Alquist, Campbell, Florez, Frusetta, Gallegos, Machado,
Mazzoni, Pescetti, and Washington)

                        MARCH 18, 1999

   An act amend Sections 5222, 5237, 5819, 6018, 6211, 6611, 7222,
7236, 8011, 8018, 8211, 8611, 8723, 9222, 9245, 12362, 12376, 12531,
12539, 12571, 12631, and 12662 of, and to add Sections 6325, 7122.3,
8325, 12302.1, and 12594 to, the Corporations Code, relating to
corporations.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1687, Committee on Banking and Finance.  Nonprofit and consumer
cooperative corporations.
   Existing law provides for the formation and regulation of various
types of nonprofit corporations, including nonprofit public benefit
corporations, nonprofit mutual benefit corporations, and nonprofit
religious corporations.  Existing law also provides for the formation
and regulation of certain corporations for specific purposes,
including consumer cooperative corporations.
   This bill would revise various provisions relating to these
corporations.  It would, under certain conditions:
   (1) Provide that any reduction of the number of classes of
directors does not remove any director prior to expiration of the
director's term of office.
   (2) Provide that the damages recoverable from a director for
approving an illegal distribution of property shall be the fair
market value of that property, and provide that the damages
recoverable for any illegal distribution shall also include interest
and reasonably incurred costs of appraisal or other valuation.
   (3) Deny retroactive effectiveness to the merger of a California
corporation into a foreign corporation.
   (4) Permit the resignation of agents for service of process when
the agents disclaim appointment and permit the resignation of
officers and directors improperly appointed.
   (5) Require the corporations to inform members, upon request, of
actions taken by other members at meetings.
   (6) Modify filing requirements otherwise applicable on the
dissolution of a corporation if an election to dissolve is made by
vote of all the members or by the board of a corporation that does
not have members.
   (7) Require the Secretary of State to refuse to file articles for
a corporation containing references in its name to the industrial
loan business unless the corporation is authorized to be engaged in
that business.
   (8) Require an agreement of merger, if memberships in a
corporation are to be canceled without consideration as a result of
the merger, to contain a provision to that effect.
   The bill would make other related changes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 5222 of the Corporations Code is amended to
read:
   5222.  (a) Subject to subdivisions (b) and (f) of this section,
any or all directors may be removed without cause if:
   (1) In a corporation with fewer than 50 members, the removal is
approved by a majority of all members (Section 5033).
   (2) In a corporation with 50 or more members, the removal is
approved by the members (Section 5034).
   (3) In a corporation with no members, the removal is approved by a
majority of the directors then in office.
   (b) Except for a corporation having no members pursuant to Section
5310:
   (1) In a corporation in which the articles or bylaws authorize
members to cumulate their votes pursuant to subdivision (a) of
Section 5616, no director may be removed (unless the entire board is
removed) when the votes cast against removal, or not consenting in
writing to the removal, would be sufficient to elect the director if
voted cumulatively at an election at which the same total number of
votes were cast (or, if the action is taken by written ballot, all
memberships entitled to vote were voted) and the entire number of
directors authorized at the time of the director's most recent
election were then being elected.
   (2) When by the provisions of the articles or bylaws the members
of any class, voting as a class, are entitled to elect one or more
directors, any director so elected may be removed only by the
applicable vote of the members of that class.
   (3) When by the provisions of the articles or bylaws the members
within a chapter or other organizational unit, or region or other
geographic grouping, voting as such, are entitled to elect one or
more directors, any director so elected may be removed only by the
applicable vote of the members within the organizational unit or
geographic grouping.
   (c) Any reduction of the authorized number of directors or any
amendment reducing the number of classes of directors does not remove
any director prior to the expiration of the director's term of
office.
   (d) Except as provided in this section and Sections 5221 and 5223,
a director may not be removed prior to the expiration of the
director's term of office.
   (e) Where a director removed under this section or Section 5221 or
5223 was chosen by designation pursuant to subdivision (d) of
Section 5220, then:
   (1) Where a different person may be designated pursuant to
governing article or bylaw provision, the new designation shall be
made.
   (2) Where the governing article or bylaw provision contains no
provision under which a different person may be designated, the
governing article or bylaw provision shall be deemed repealed.
   (f) When by the provisions of the articles or bylaws a person or
persons are entitled to designate one or more directors, then:
   (1) Unless otherwise provided in the articles or bylaws at the
time of designation, any director so designated may be removed
without cause by the designating person or persons.
   (2) Any director so designated may only be removed under
subdivision (a) with the written consent of the designating person or
persons.
  SEC. 2.  Section 5237 of the Corporations Code is amended to read:

   5237.  (a) Subject to the provisions of Section 5231, directors of
a corporation who approve any of the following corporate actions
shall be jointly and severally liable to the corporation for:
   (1) The making of any distribution.
   (2) The distribution of assets after institution of dissolution
proceedings of the corporation, without paying or adequately
providing for all known liabilities of the corporation, excluding any
claims not filed by creditors within the time limit set by the court
in a notice given to creditors under Chapters 15 (commencing with
Section 6510), 16 (commencing with Section 6610) and 17 (commencing
with Section 6710).
   (3) The making of any loan or guaranty contrary to Section 5236.
   (b) A director who is present at a meeting of the board, or any
committee thereof, at which action specified in subdivision (a) is
taken and who abstains from voting shall be considered to have
approved the action.
   (c) Suit may be brought in the name of the corporation to enforce
the liability:
   (1) Under paragraph (1) of subdivision (a) against any or all
directors liable by the persons entitled to sue under subdivision (b)
of Section 5420;
   (2) Under paragraph (2) or (3) of subdivision (a) against any or
all directors liable by any one or more creditors of the corporation
whose debts or claims arose prior to the time of the corporate action
who have not consented to the corporate action, whether or not they
have reduced their claims to judgment;
   (3) Under paragraph (1), (2) or (3) of subdivision (a), by the
Attorney General.
   (d) The damages recoverable from a director under this section
shall be the amount of the illegal distribution, or if the illegal
distribution consists of property, the fair market value of that
property at the time of the illegal distribution, plus interest
thereon from the date of the distribution at the legal rate on
judgments until paid, together with all reasonably incurred costs of
appraisal or other valuation, if any, of that property, or the loss
suffered by the corporation as a result of the illegal loan or
guaranty.
   (e) Any director sued under this section may implead all other
directors liable and may compel contribution, either in that action
or in an independent action against directors not joined in that
action.
   (f) Directors liable under this section shall also be entitled to
be subrogated to the rights of the corporation:
   (1) With respect to paragraph (1) of subdivision (a), against the
persons who received the distribution.
   (2) With respect to paragraph (2) of subdivision (a), against the
persons who received the distribution.
   (3) With respect to paragraph (3) of subdivision (a), against the
person who received the loan or guaranty.
   Any director sued under this section may file a cross-complaint
against the person or persons who are liable to the director as a
result of the subrogation provided for in this subdivision or may
proceed against them in an independent action.
  SEC. 4.  Section 5819 of the Corporations Code is amended to read:

   5819.  (a) A corporation may restate in a single certificate the
entire text of its articles as amended by filing an officers'
certificate or, in circumstances where incorporators or the board may
amend a corporation's articles pursuant to Sections 5811 and 5815, a
certificate signed and verified by a majority of the incorporators
or the board, as applicable, entitled "Restated Articles of
Incorporation of (insert name of corporation)" that shall set forth
the articles as amended to the date of filing of the certificate,
except that the signatures and acknowledgments of the articles by the
incorporators and any statements regarding the effect of any prior
amendment upon memberships and any provisions of agreements of merger
(other than amendments to the articles of the surviving corporation)
and the names and addresses of the first directors and of the
initial agent for service of process shall be omitted (except that
the names and addresses of the initial agent for service of process
and, if previously set forth in the articles, the initial directors,
shall not be omitted prior to the time that the corporation has filed
a statement under Section 6210).  Those omissions are not
alterations or amendments of the articles.  The certificate may also
itself alter or amend the articles in any respect, in which case the
certificate must comply with Section 5814 or 5815, as the case may
be, and Section 5816.
   (b) If the certificate does not itself alter or amend the articles
in any respect, it shall be approved by the board or, prior to the
issuance of any memberships and the naming and election of directors,
by a majority of the incorporators, and shall be subject to the
provisions of this chapter relating to an amendment of the articles
not requiring approval of the members (Section 5034).  If the
certificate does itself alter or amend the articles, it shall be
subject to the provisions of this chapter relating to the amendment
or amendments so made.
   (c) Restated articles of incorporation filed pursuant to this
section shall supersede for all purposes the original articles and
all amendments filed prior thereto.
  SEC. 5.  Section 6018 of the Corporations Code is amended to read:

   6018.  (a) Subject to the provisions of Section 6010, the merger
of any number of corporations with any number of foreign corporations
may be effected if the foreign corporations are authorized by the
laws under which they are formed to effect the merger.  The surviving
corporation may be any one of the constituent corporations and shall
continue to exist under the laws of the state or place of its
incorporation.
   (b) If the surviving corporation is a public benefit corporation
or a religious corporation, the merger proceedings with respect to
that corporation and any disappearing corporation shall conform to
the provisions of this chapter governing the merger of corporations,
but if the surviving corporation is a foreign corporation, then,
subject to the requirements of subdivision (d) and Section 6012, the
merger proceedings may be in accordance with the laws of the state or
place of incorporation of the surviving corporation.
   (c) If the surviving corporation is a public benefit corporation
or a religious corporation, the agreement and the officers'
certificate of each constituent corporation shall be filed as
provided in Section 6014 and thereupon, subject to subdivision (c) of
Section 5008, the merger shall be effective as to each corporation;
and each foreign disappearing corporation that is qualified for the
transaction of intrastate business shall by virtue of the filing
automatically surrender its right to transact intrastate business.
   (d) If the surviving corporation is a foreign corporation, the
merger shall become effective in accordance with the law of the
jurisdiction in which it is organized, but shall be effective as to
any disappearing corporation as of the time of effectiveness in the
foreign jurisdiction upon the filing in this state as required by
this subdivision.  There shall be filed as to the domestic
disappearing corporation or corporations the documents described in
any one of the following paragraphs:
   (1) A copy of the agreement, certificate, or other document filed
by the surviving foreign corporation in the state or place of its
incorporation for the purpose of effecting the merger, which copy
shall be certified by the public officer having official custody of
the original.
   (2) An executed counterpart of the agreement, certificate, or
other document filed by the surviving corporation in the state or
place of its incorporation for the purpose of effecting the merger.
   (3) A copy of the agreement of merger with an officers'
certificate of the surviving foreign corporation and of each
constituent domestic corporation attached, which officers'
certificates shall conform to the requirements of Section 6014.
   (e) If the date of the filing in this state pursuant to
subdivision (d) is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of the
domestic corporation are suspended at the time of effectiveness in
the foreign jurisdiction, the merger shall be effective as to the
domestic disappearing corporation or corporations as of the date of
filing in this state.  Each foreign disappearing corporation that is
qualified for the transaction of intrastate business shall
automatically by the filing pursuant to subdivision (d) surrender its
right to transact intrastate business as of the date of filing in
this state regardless of the time of effectiveness as to a domestic
disappearing corporation.
   (f) A certificate of satisfaction of the Franchise Tax Board shall
be filed when required by Section 6014 or when required by Section
23334 of the Revenue and Taxation Code.
  SEC. 6.  Section 6211 of the Corporations Code is amended to read:

   6211.  (a) An agent designated for service of process pursuant to
Section 6210 may file a signed and acknowledged written statement of
resignation as that agent.  Thereupon the authority of the agent to
act in that capacity shall cease and the Secretary of State forthwith
shall give written notice of the filing of the statement of
resignation by mail to the corporation addressed to its principal
office.
   (b) Under regulations adopted by the Secretary of State, the
resignation of an agent may be effective if the agent disclaims
having been properly appointed as the agent.  Similarly, a person
named as an officer or director may indicate that the person was
never properly appointed as the officer or director.
  SEC. 7.  Section 6325 is added to the Corporations Code, to read:
   6325.  For a period of 60 days following the conclusion of an
annual, regular, or special meeting of members, a corporation shall,
upon written request from a member, forthwith inform the member of
the result of any particular vote of members taken at the meeting,
including the number of memberships voting for, the number of
memberships voting against, and the number of memberships abstaining
or withheld from voting.  If the matter voted on was the election of
directors, the corporation shall report the number of memberships, or
votes if voted cumulatively, cast for each nominee for director.  If
more than one class or series of memberships voted, the report shall
state the appropriate numbers by class and series of memberships.
  SEC. 8.  Section 6611 of the Corporations Code is amended to read:

   6611.  (a) Whenever a corporation has elected to wind up and
dissolve a certificate evidencing that election shall forthwith be
filed and a copy thereof filed with the Attorney General.
   (b) The certificate shall be an officers' certificate or shall be
signed and verified by at least a majority of the directors then in
office or by one or more members authorized to do so by approval of a
majority of all members (Section 5033) and shall set forth:
   (1) That the corporation has elected to wind up and dissolve.
   (2) If the election was made by the vote of members alone, the
number of votes for the election and that the election was made by a
majority of all members (Section 5033).
   (3) If the election was made by the board and members pursuant to
paragraph (2) of subdivision (a) of Section 6610, the certificate
shall state that it was made by the board and the members in
accordance with Section 5034.
   (4) If the certificate is executed by a member or members, that
the subscribing person or persons were authorized to execute the
certificate by a majority of all members (Section 5033).
   (5) If the election was made by the board pursuant to subdivision
(b) of Section 6610, the circumstances showing the corporation to be
within one of the categories described in that subdivision.
   (c) If an election to dissolve made pursuant to subdivision (a) of
Section 6610 is made by the vote of all the members of a corporation
with members or by all members of the board of a corporation without
members and a statement to that effect is added to the certificate
of dissolution pursuant to Section 6611, the separate filing of the
certificate of election pursuant to this section is not required.
  SEC. 10.  Section 7122.3 is added to the Corporations Code, to
read:
   7122.3.  The Secretary of State shall not file articles for a
corporation the name of which would fall within the prohibitions of
Section 18104 of the Financial Code.  This section shall not apply to
articles filed for a corporation organized in accordance with
Section 18100 of the Financial Code.
  SEC. 11.  Section 7222 of the Corporations Code is amended to read:

   7222.  (a) Subject to subdivisions (b) and (f) of this section,
any or all directors may be removed without cause if:
   (1) In a corporation with fewer than 50 members, the removal is
approved by a majority of all members (Section 5033).
   (2) In a corporation with 50 or more members, the removal is
approved by the members (Section 5034).
   (3) In a corporation with no members, the removal is approved by a
majority of the directors then in office.
   (b) Except for a corporation having no members, pursuant to
Section 7310:
   (1) In a corporation in which the articles or bylaws authorize
members to cumulate their votes pursuant to subdivision (a) of
Section 7615, no director may be removed (unless the entire board is
removed) when the votes cast against removal, or not consenting in
writing to the removal, would be sufficient to elect the director if
voted cumulatively at an election at which the same total number of
votes were cast (or, if the action is taken by written ballot, all
memberships entitled to vote were voted) and the entire number of
directors authorized at the time of the director's most recent
election were then being elected.
   (2) When by the provisions of the articles or bylaws the members
of any class, voting as a class, are entitled to elect one or more
directors, any director so elected may be removed only by the
applicable vote of the members of that class.
   (3) When by the provisions of the articles or bylaws the members
within a chapter or other organizational unit, or region or other
geographic grouping, voting as such, are entitled to elect one or
more directors, any director so elected may be removed only by the
applicable vote of the members within the organizational unit or
geographic grouping.
   (c) Any reduction of the authorized number of directors or any
amendment reducing the number of classes of directors does not remove
any director prior to the expiration of the director's term of
office.
   (d) Except as provided in this section and Sections 7221 and 7223,
a director may not be removed prior to the expiration of the
director's term of office.
   (e) Where a director removed under this section or Section 7221 or
7223 was chosen by designation pursuant to subdivision (d) of
Section 7220, then:
   (1) Where a different person may be designated pursuant to the
governing article or bylaw provision, the new designation shall be
made.
   (2) Where the governing article or bylaw provision contains no
provision under which a different person may be designated, the
governing article or bylaw provision shall be deemed repealed.
   (f) When by the provisions of the articles or bylaws a person or
persons are entitled to designate one or more directors, then:
   (1) Unless otherwise provided in the articles or bylaws at the
time of designation, any director so designated may be removed
without cause by the designating person or persons.
   (2) Any director so designated may only be removed under
subdivision (a) with the written consent of the designating person or
persons.
  SEC. 12.  Section 7236 of the Corporations Code is amended to read:

   7236.  (a) Subject to the provisions of Section 7231, directors of
a corporation who approve any of the following corporate actions
shall be jointly and severally liable to the corporation for the
benefit of all of the creditors entitled to institute an action under
paragraph (1) or (2) of subdivision (c) or to the corporation in an
action by the head organization or members under paragraph (1) or (3)
of subdivision (c):
   (1) The making of any distribution contrary to Chapter 4
(commencing with Section 7410).
   (2) The distribution of assets after institution of dissolution
proceedings of the corporation, without paying or adequately
providing for all known liabilities of the corporation, excluding any
claims not filed by creditors within the time limit set by the court
in a notice given to creditors under Chapter 15 (commencing with
Section 8510), 16 (commencing with Section 8610), and 17 (commencing
with Section 8710).
   (3) The making of any loan or guaranty contrary to Section 7235.
   (b) A director who is present at a meeting of the board, or any
committee thereof, at which action specified in subdivision (a) is
taken and who abstains from voting shall be considered to have
approved the action.
   (c) Suit may be brought in the name of the corporation to enforce
the liability:
   (1) Under paragraph (1) of subdivision (a) against any or all
directors liable by the persons entitled to sue under subdivision (c)
of Section 7420.
   (2) Under paragraph (2) or (3) of subdivision (a) against any or
all directors liable by any one or more creditors of the corporation
whose debts or claims arose prior to the time of the corporate action
who have not consented to the corporate action, whether or not they
have reduced their claims to judgment.
   (3) Under paragraph (3) of subdivision (a) against any or all
directors liable by any one or more members at the time of any
corporate action specified in paragraph (3) of subdivision (a) who
have not consented to the corporate action, without regard to the
provisions of Section 7710.
   (d) The damages recoverable from a director under this section
shall be the amount of the illegal distribution, or if the illegal
distribution consists of property, the fair market value of that
property at the time of the illegal distribution, plus interest
thereon from the date of the distribution at the legal rate on
judgments until paid, together with all reasonably incurred costs of
appraisal or other valuation, if any, of that property, or the loss
suffered by the corporation as a result of the illegal loan or
guaranty, but not exceeding, in the case of an action for the benefit
of creditors, the liabilities of the corporation owed to
nonconsenting creditors at the time of the violation.
   (e) Any director sued under this section may implead all other
directors liable and may compel contribution, either in that action
or in an independent action against directors not joined in that
action.
   (f) Directors liable under this section shall also be entitled to
be subrogated to the rights of the corporation:
   (1) With respect to paragraph (1) of subdivision (a), against the
persons who received the distribution.
   (2) With respect to paragraph (2) of subdivision (a), against the
persons who received the distribution.
   (3) With respect to paragraph (3) of subdivision (a), against the
person who received the loan or guaranty.
   Any director sued under this section may file a cross-complaint
against the person or persons who are liable to the director as a
result of the subrogation provided for in this subdivision or may
proceed against them in an independent action.
  SEC. 14.  Section 8011 of the Corporations Code is amended to read:

   8011.  The board of each corporation that desires to merge shall
approve an agreement of merger.  The constituent corporations shall
be parties to the agreement of merger and other persons may be
parties to the agreement of merger.  The agreement shall state all of
the following:
   (a) The terms and conditions of the merger.
   (b) The amendments, subject to Sections 7810 and 7816, to the
articles of the surviving corporation to be effected by the merger,
if any; if any amendment changes the name of the surviving
corporation, the new name may be the same as or similar to the name
of a disappearing corporation, subject to subdivision (c) of Section
7122.
   (c) The amendments to the bylaws of the surviving corporation to
be effected by the merger, if any.
   (d) The name and place of incorporation of each constituent
corporation and which of the constituent corporations is the
surviving corporation.
   (e) The manner, if any, of converting memberships or securities of
the constituent corporations into memberships or securities of the
surviving corporation and, if any memberships or securities of any of
the constituent corporations are not to be converted solely into
memberships or securities of the surviving corporation, the cash,
property, rights or securities of any corporation that the holders of
those memberships or securities are to receive in exchange for the
memberships or securities, which cash, property, rights or securities
of any corporation may be in addition to or in lieu of memberships
or securities of the surviving corporation, or that the memberships
are to be canceled without consideration.
   (f) Other details or provisions as are desired, if any, including,
without limitation, if not prohibited by this chapter, a provision
for the payment of cash in lieu of fractional memberships or for any
other arrangement with respect thereto.
  SEC. 15.  Section 8018 of the Corporations Code is amended to read:

   8018.  (a) Subject to the provisions of Section 8010, the merger
of any number of corporations with any number of foreign
corporations, foreign business corporations or domestic corporations
may be effected if the foreign corporations are authorized by the
laws under which they are formed to effect the merger.  The surviving
corporation may be any one of the constituent corporations and shall
continue to exist under the laws of the state or place of its
incorporation.
   (b) If the surviving corporation is a mutual benefit corporation,
the merger proceedings with respect to that corporation and any
domestic disappearing corporation shall conform to the provisions of
this chapter and other applicable laws of this state, but if the
surviving corporation is a foreign corporation, then, subject to the
requirements of subdivision (d) and Section 8012 the merger
proceedings may be in accordance with the laws of the state or place
of incorporation of the surviving corporation.
   (c) If the surviving corporation is a mutual benefit corporation,
the agreement and the officers' certificate of each constituent
corporation shall be filed as provided in Section 8014 and thereupon,
subject to subdivision (c) of Section 5008, the merger shall be
effective as to each corporation; and each foreign disappearing
corporation that is qualified for the transaction of intrastate
business shall, by virtue of the filing, automatically surrender its
right to transact intrastate business.
   (d) If the surviving corporation is a foreign corporation, or
foreign business corporation, the merger shall become effective in
accordance with the law of the jurisdiction in which it is organized,
but shall be effective as to any disappearing corporation as of the
time of effectiveness in the foreign jurisdiction upon the filing in
this state as required by this subdivision.  There shall be filed as
to the domestic disappearing corporation or corporations the
documents described                                           in any
one of the following paragraphs:
   (1) A copy of the agreement, certificate, or other document filed
by the surviving foreign corporation in the state or place of its
incorporation for the purpose of effecting the merger, which copy
shall be certified by the public officer having official custody of
the original.
   (2) An executed counterpart of the agreement, certificate, or
other document filed by the surviving corporation in the state or
place of its incorporation for the purpose of effecting the merger.
   (3) A copy of the agreement of merger with an officers'
certificate of the surviving foreign corporation and of each
constituent domestic corporation attached, which officers'
certificates shall conform to the requirements of Section 8014.
   (e) If the date of the filing in this state pursuant to
subdivision (d) is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of the
domestic corporation are suspended at the time of effectiveness in
the foreign jurisdiction, the merger shall be effective as to the
domestic disappearing corporation or corporations as of the date of
filing in this state.  Each foreign disappearing corporation that is
qualified for the transaction of intrastate business shall
automatically by the filing pursuant to subdivision (d) surrender its
right to transact intrastate business as of the date of filing in
this state regardless of the time of effectiveness as to a domestic
disappearing corporation.
   (f) A certificate of satisfaction of the Franchise Tax Board shall
be filed when required by Section 8014 or when required by Section
23334 of the Revenue and Taxation Code.
  SEC. 16.  Section 8211 of the Corporations Code is amended to read:

   8211.  (a) An agent designated for service of process pursuant to
Section 8210 may file a signed and acknowledged written statement of
resignation as that agent.  Thereupon the authority of the agent to
act in that capacity shall cease and the Secretary of State forthwith
shall give written notice of the filing of the statement of
resignation by mail to the corporation addressed to its principal
office.
   (b) Under regulations adopted by the Secretary of State, the
resignation of an agent may be effective if the agent disclaims
having been properly appointed as the agent.  Similarly, a person
named as an officer or director may indicate that the person was
never properly appointed as the officer or director.
  SEC. 17.  Section 8325 is added to the Corporations Code, to read:

   8325.  For a period of 60 days following the conclusion of an
annual, regular, or special meeting of members, a corporation shall,
upon written request from a member, forthwith inform the member of
the result of any particular vote of members taken at the meeting,
including the number of memberships voting for, the number of
memberships voting against, and the number of memberships abstaining
or withheld from voting.  If the matter voted on was the election of
directors, the corporation shall report the number of memberships, or
votes if voted cumulatively, cast for each nominee for director.  If
more than one class or series of memberships voted, the report shall
state the appropriate numbers by class and series of memberships.
  SEC. 18.  Section 8611 of the Corporations Code is amended to read:

   8611.  (a) Whenever a corporation has elected to wind up and
dissolve a certificate evidencing that election shall forthwith be
filed.  A copy of that certificate shall be filed with the Attorney
General if the corporation holds assets in charitable trust or has a
charitable dissolution clause.
   (b) The certificate shall be an officers' certificate or shall be
signed and verified by at least a majority of the directors then in
office or by one or more members authorized to do so by approval of a
majority of all members (Section 5033) and shall set forth:
   (1) That the corporation has elected to wind up and dissolve.
   (2) If the election was made by the vote of members alone, the
number of votes for the election and that the election was made by a
majority of all members (Section 5033).
   (3) If the election was made by the board and the members pursuant
to paragraph (2) of subdivision (a) of Section 8610, the certificate
shall state that it was made by the board and the members in
accordance with Section 5034.
   (4) If the certificate is executed by a member or members, that
the subscribing person or persons were authorized to execute the
certificate a majority of all members (Section 5033).
   (5) If the election was made by the board pursuant to subdivision
(b) of Section 8610, the circumstances showing the corporation to be
within one of the categories described in that subdivision.
   (c) If an election to dissolve made pursuant to subdivision (a) of
Section 8610 is made by the vote of all the members of a corporation
with members or by all members of the board of a corporation without
members and a statement to that effect is added to the certificate
of dissolution pursuant to Section 8611, the separate filing of the
certificate of election pursuant to this section is not required.
  SEC. 19.  Section 8723 of the Corporations Code is amended to read:

   8723.  (a) (1) Causes of action against a dissolved corporation,
whether arising before or after the dissolution of the corporation,
may be enforced against any of the following:
   (A) Against the dissolved corporation, to the extent of its
undistributed assets, including, without limitation, any insurance
assets held by the corporation that may be available to satisfy
claims.
   (B) If any of the assets of the dissolved corporation have been
distributed to other persons, against those persons to the extent of
their pro rata share of the claim or to the extent of the corporate
assets distributed to them upon dissolution of the corporation,
whichever is less.
   The total liability of a person under this section may not exceed
the total amount of assets of the dissolved corporation distributed
to that person upon dissolution of the corporation.
   (2) Except as set forth in subdivision (c), all causes of action
against a person to whom assets were distributed arising under this
section are extinguished unless the claimant commences a proceeding
to enforce the cause of action against that person prior to the
earlier of the following:
   (A) The expiration of the statute of limitations applicable to the
cause of action.
   (B) Four years after the effective date of the dissolution of the
corporation.
   (3) As a matter of procedure only, and not for purposes of
determining liability, persons to whom assets of a dissolved
corporation are distributed may be sued in the name of the
corporation upon any cause of action against the corporation.  This
section does not affect the rights of the corporation or its
creditors under Section 2009, or the rights, if any, of creditors
under the Uniform Fraudulent Transfer Act, which may arise against
persons to whom those assets are distributed.
   (4) This subdivision applies to corporations dissolved on or after
January 1, 2000.  Corporations dissolved prior to that date are
subject to the law in effect prior to that date.
   (b) Summons or other process against the corporation may be served
by delivering a copy thereof to an officer, director or person
having charge of its assets or, if none of these persons can be
found, to any agent upon whom process might be served at the time of
dissolution.  If none of those persons can be found with due
diligence and it is so shown by affidavit to the satisfaction of the
court, then the court may make an order that summons or other process
be served upon the dissolved corporation by personally delivering a
copy thereof, together with a copy of the order, to the Secretary of
State or an assistant or deputy secretary of state, with an
additional copy of the summons or other process and order being
delivered to the Attorney General in the case of a corporation that
at the commencement of the dissolution proceedings held assets in
charitable trust.  Service in this manner is deemed complete on the
10th day after delivery of the process to the Secretary of State, or
in the case of a corporation that at the commencement of the
dissolution proceedings held assets in charitable trust, upon the
10th day after the later of delivery of process to the Secretary of
State or Attorney General.
   (c) The corporation shall survive and continue to exist
indefinitely for the purpose of being sued in any quiet title action.
  Any judgment rendered in that action shall bind each of its members
or other persons having any equity or other interest in the
corporation, to the extent of their interest therein, and that action
shall have the same force and effect as an action brought under the
provisions of Sections 410.50 and 410.60 of the Code of Civil
Procedure.  Service of summons or other process in that action may be
made as provided in Chapter 4 (commencing with Section 413.10) of
Title 5 of Part 2 of the Code of Civil Procedure or as provided in
subdivision (b).
   (d) Upon receipt of that process and the fee therefor, the
Secretary of State forthwith shall give notice to the corporation as
provided in Section 1702.
  SEC. 20.  Section 9222 of the Corporations Code is amended to read:

   9222.  (a) Except as provided in the articles or bylaws and
subject to subdivision (b) of this section, any or all directors may
be removed without cause if the removal is approved by the members
(Section 5034).
   (b) Except for a corporation having no members pursuant to Section
9310:
   (1) When by the provisions of the articles or bylaws the members
of any class, voting as a class, are entitled to elect one or more
directors, any director so elected may be removed only by the
applicable vote of the members of that class.
   (2) When by the provisions of the articles or bylaws the members
within a chapter or other organizational unit, or region or other
geographic grouping, voting as such, are entitled to elect one or
more directors, any director so elected may be removed only by the
applicable vote of the members within the organizational unit or
geographic grouping.
   (c) Any reduction of the authorized number of directors or any
amendment reducing the number of classes of directors does not remove
any director prior to the expiration of the director's term of
office.
  SEC. 21.  Section 9245 of the Corporations Code is amended to read:

   9245.  (a) Subject to the provisions of Section 9241, directors of
a corporation who approve any of the following corporate actions
shall be jointly and severally liable to the corporation for:
   (1) The making of any distribution.
   (2) The distribution of assets after institution of dissolution
proceedings of the corporation, without paying or adequately
providing for all known liabilities of the corporation, excluding any
claims not filed by creditors within the time limit set by the court
in a notice given to creditors under Section 9680 and those sections
made applicable to this part by Section 9680.
   (3) The making of any loan or guaranty contrary to Section 9241.
   (b) Suit may be brought in the name of the corporation to enforce
the liability:
   (1) Under paragraph (1) of subdivision (a) against any or all
directors liable by the persons entitled to sue under subdivision (b)
of Section 9610;
   (2) Under paragraph (2) or (3) of subdivision (a) against any or
all directors liable by any one or more creditors of the corporation
whose debts or claims arose prior to the time of the corporate action
who have not consented to the corporate action, whether or not they
have reduced their claims to judgment.
   (c) The damages recoverable from a director under this section
shall be the amount of the illegal distribution, or if the illegal
distribution consists of property, the fair market value of that
property at the time of the illegal distribution, plus interest
thereon from the date of the distribution at the legal rate on
judgments until paid, together with all reasonably incurred costs of
appraisal or other valuation, if any, of that property, or the loss
suffered by the corporation as a result of the illegal loan or
guaranty.
   (d) Any director sued under this section may implead all other
directors liable and may compel contribution, either in that action
or in an independent action against directors not joined in that
action.
   (e) Directors liable under this section shall also be entitled to
be subrogated to the rights of the corporation as follows:
   (1) With respect to paragraph (1) of subdivision (a), against
members who received the distribution.
   (2) With respect to paragraph (2) of subdivision (a), against the
members who received the distribution.
   (3) With respect to paragraph (3) of subdivision (a), against the
person who received the loan or guaranty.
   Any director sued under this section may file a cross-complaint
against the person or persons who are liable to the director as a
result of the subrogation provided for in this subdivision or may
proceed against them in an independent action.
  SEC. 23.  Section 12302.1 is added to the Corporations Code, to
read:
   12302.1.  The Secretary of State shall not file articles for a
corporation the name of which would fall within the prohibitions of
Section 18104 of the Financial Code.  This section shall not apply to
articles filed for a corporation organized in accordance with
Section 18100 of the Financial Code.
  SEC. 24.  Section 12362 of the Corporations Code is amended to
read:
   12362.  (a) Subject to subdivisions (b), (c) and (g), any or all
directors may be removed without cause if one of the following
applies:
   (1) In a corporation with fewer than 50 members, the removal is
approved by a majority of all members (Section 12223).
   (2) In a corporation with 50 or more members, the removal is
approved by the members (Section 12224).
   (b) In a corporation in which the articles or bylaws authorize
members to cumulate their votes pursuant to subdivision (a) of
Section 12485, no director may be removed (unless the entire board is
removed) when the votes cast against removal, or not consenting in
writing to the removal, would be sufficient to elect the director if
voted cumulatively at an election at which the same total number of
votes were cast (or, if the action is taken by written ballot, all
memberships entitled to vote were voted) and the entire number of
directors authorized at the time of the director's most recent
election were then being elected; and
   (c) When by the provisions of the articles or bylaws the members
of any class, voting as a class, are entitled to elect one or more
directors, any director so elected may be removed only by the
applicable vote of the members of that class.
   (d) Any reduction of the authorized number of directors or any
amendment reducing the number of class of directors does not remove
any director prior to the expiration of the director's term of
office.
   (e) Except as provided in this section and Sections 12361 and
12363, a director may not be removed prior to the expiration of the
director's term of office.
   (f) Where a director removed under this section or Section 12361
or 12363 was chosen by designation pursuant to subdivision (d) of
Section 12360, then:
   (1) Where a different person may be designated pursuant to the
governing article or bylaw provision, the new designation shall be
made; or
   (2) Where the governing article or bylaw provision contains no
provision under which a different person may be designated, the
governing article or bylaw provision shall be deemed repealed.
   (g) When by the provisions of the articles or bylaws a person or
persons are entitled to designate one or more directors, the
provisions shall also provide for removal of those directors and any
director so designated may only be removed as so provided.
  SEC. 25.  Section 12376 of the Corporations Code is amended to
read:
   12376.  (a) Subject to the provisions of Section 12371, directors
of a corporation who approve any of the following corporate actions
are jointly and severally liable to the corporation for the benefit
of all of the creditors entitled to institute an action under
paragraph (1) or (2) of subdivision (c) or to the corporation in an
action by members under paragraph (3) of subdivision (c):
   (1) The making of any distribution or purchase or redemption of
memberships contrary to Chapter 4 (commencing with Section 12450).
   (2) The distribution of assets after institution of dissolution
proceedings of the corporation, without paying or adequately
providing for all known liabilities of the corporation, excluding any
claims not filed by creditors within the time limit set by the court
in a notice given to creditors under Chapters 15 (commencing with
Section 12620), 16 (commencing with Section 12630), and 17
(commencing with Section 12650).
   (3) The making of any loan or guarantee contrary to Section 12375.

   (b) A director who is present at a meeting of the board, or any
committee thereof, at which action specified in subdivision (a) is
taken and who abstains from voting shall be considered to have
approved the action.
   (c) Suit may be brought in the name of the corporation to enforce
the liability:
   (1) Under paragraph (1) of subdivision (a) against any or all
directors liable by the persons entitled to sue under subdivision (c)
of Section 12455.
   (2) Under paragraph (2) or (3) of subdivision (a) against any or
all directors liable by any one or more creditors of the corporation
whose debts or claims arose prior to the time of the corporate action
who have not consented to the corporate action, whether or not they
have reduced their claims to judgment.
   (3) Under paragraph (3) of subdivision (a) against any or all
directors liable by any one or more members at the time of any
corporate action specified in paragraph (3) of subdivision (a) who
have not consented to the corporate action, without regard to the
provisions of Section 12490.
   (d) The damages recoverable from a director under this section
shall be the amount of the illegal distribution, or if the illegal
distribution consists of property, the fair market value of that
property at the time of the illegal distribution, plus interest
thereon from the date of the distribution at the legal rate on
judgments until paid, together with all reasonably incurred costs of
appraisal or other valuation, if any, of that property, or the loss
suffered by the corporation as a result of the illegal loan or
guarantee, but not exceeding, in the case of an action for the
benefit of creditors, the liabilities of the corporation owed to
nonconsenting creditors at the time of the violation.
   (e) Any director sued under this section may implead all other
directors liable and may compel contribution, either in that action
or in an independent action against directors not joined in that
action.
   (f) Directors liable under this section shall also be entitled to
be subrogated to the rights of the corporation:
   (1) With respect to paragraph (1) of subdivision (a), against the
persons who received the distribution.
   (2) With respect to paragraph (2) of subdivision (a), against the
persons who received the distribution.
   (3) With respect to paragraph (3) of subdivision (a), against the
person who received the loan or guarantee.
   Any director sued under this section may file a cross-complaint
against the person or persons who are liable to the director as a
result of the subrogation provided for in this subdivision or may
proceed against them in an independent action.
  SEC. 27.  Section 12531 of the Corporations Code is amended to
read:
   12531.  The board of each corporation that desires to merge shall
approve an agreement of merger.  The constituent corporations shall
be parties to the agreement of merger and other persons may be
parties to the agreement of merger.  The agreement shall state all of
the following:
   (a) The terms and conditions of the merger.
   (b) The amendments, subject to Sections 12500 and 12505 to the
articles of the surviving corporation to be effected by the merger,
if any; if any amendment changes the name of the surviving
corporation, the new name may be the same as or similar to the name
of a disappearing corporation, subject to subdivision (c) of Section
12302.
   (c) The amendments to the bylaws of the surviving corporation to
be effected by the merger, if any.
   (d) The name and place of incorporation of each constituent
corporation and which of the constituent corporations is the
surviving corporation.
   (e) The manner, if any, of converting memberships or securities of
the constituent corporations into memberships or securities of the
surviving corporation and, if any memberships or securities of any of
the constituent corporations are not to be converted solely into
memberships or securities of the surviving corporation, the cash,
property, rights or securities of any corporation that the holders of
those memberships or securities are to receive in exchange for the
memberships or securities, which cash, property, rights or securities
of any corporation may be in addition to or in lieu of memberships
or securities of the surviving corporation or that the memberships
are to be canceled without consideration.
   (f) Other details or provisions as are desired, if any, including,
without limitation, if not prohibited by this chapter, a provision
for the payment of cash in lieu of fractional memberships or for any
other arrangement with respect thereto.
  SEC. 28.  Section 12539 of the Corporations Code is amended to
read:
   12539.  (a) Subject to the provisions of Section 12530, the merger
of any number of corporations with any number of foreign
corporations, foreign business corporations, or domestic corporations
may be effected if the foreign corporations are authorized by the
laws under which they are formed to effect the merger.  The surviving
corporation may be any one of the constituent corporations and shall
continue to exist under the laws of the state or place of its
incorporation.
   (b) If the surviving corporation is a cooperative corporation, the
merger proceedings with respect to that corporation and any domestic
disappearing corporation shall conform to the provisions of this
chapter and other applicable laws of this state, but if the surviving
corporation is a foreign corporation, then, subject to the
requirements of subdivision (d) and Section 12533, the merger
proceedings may be in accordance with the laws of the state or place
of incorporation of the surviving corporation.
   (c) If the surviving corporation is a cooperative corporation, the
agreement and the officers' certificate of each constituent
corporation shall be filed as provided in Section 12535 and
thereupon, subject to subdivision (c) of Section 12214, the merger
shall be effective as to each corporation; and each foreign
disappearing corporation that is qualified for the transaction of
intrastate business shall, by virtue of the filing, automatically
surrender its right to transact intrastate business.
   (d) If the surviving corporation is a foreign corporation, the
merger shall become effective in accordance with the law of the
jurisdiction in which it is organized, but shall be effective as to
any disappearing corporation as of the time of effectiveness in the
foreign jurisdiction upon the filing in this state as required by
this subdivision.  There shall be filed as to the domestic
disappearing corporation or corporations the documents described in
any one of the following paragraphs:
   (1) A copy of the agreement, certificate, or other document filed
by the surviving corporation in the state or place of its
incorporation for the purpose of effecting the merger, which copy
shall be certified by the public officer having official custody of
the original.
   (2) An executed counterpart of the agreement, certificate, or
other document filed by the surviving corporation in the state or
place of its incorporation for the purpose of effecting the merger.
   (3) A copy of the agreement of merger with an officers'
certificate of the surviving foreign corporation and of each
constituent domestic corporation attached.
   (e) If the date of the filing in this state pursuant to
subdivision (d) is more than six months after the time of the
effectiveness in the foreign jurisdiction, or if the powers of the
domestic corporation are suspended at the time of effectiveness in
the foreign jurisdiction, the merger shall be effective as to the
domestic disappearing corporation or corporations as of the date of
filing in this state.  Each foreign disappearing corporation that is
qualified for the transaction of intrastate business shall
automatically by the filing pursuant to subdivision (d) surrender its
right to transact intrastate business as of the date of the filing
in this state regardless of the time of effectiveness as to a
domestic disappearing corporation.
   (f) A certificate of satisfaction of the Franchise Tax Board shall
be filed when required by Section 23334 of the Revenue and Taxation
Code.
  SEC. 29.  Section 12571 of the Corporations Code is amended to
read:
   12571.  (a) An agent designated for service of process pursuant to
Section 12570 may file a signed and acknowledged written statement
of resignation as that agent.  Thereupon the authority of the agent
to act in that capacity shall cease and the Secretary of State
forthwith shall give written notice of the filing of the statement of
resignation by mail to the corporation addressed to its principal
office.
   (b) Under regulations adopted by the Secretary of State, the
resignation of an agent may be effective if the agent disclaims
having been properly appointed as the agent.  Similarly, a person
named as an officer or director may indicate that the person was
never properly appointed as the officer or director.
  SEC. 30.  Section 12594 is added to the Corporations Code, to read:

   12594.  For a period of 60 days following the conclusion of an
annual, regular, or special meeting of members, a corporation shall,
upon written request from a member, forthwith inform the member of
the result of any particular vote of members taken at the meeting,
including the number of memberships voting for, the number of
memberships voting against, and the number of memberships abstaining
or withheld from voting.  If the matter voted on was the election of
directors, the corporation shall report the number of memberships, or
votes if voted cumulatively,
  cast for each nominee for director.  If more than one class or
series of memberships voted, the report shall state the appropriate
numbers by class and series of memberships.
  SEC. 31.  Section 12631 of the Corporations Code is amended to
read:
   12631.  (a) Whenever a corporation has elected to wind up and
dissolve a certificate evidencing that election shall forthwith be
filed.
   (b) The certificate shall be an officers' certificate or shall be
signed and verified by at least a majority of the directors then in
office or by one or more members authorized to do so by approval of a
majority of all members (Section 12223) and shall set forth:
   (1) That the corporation has elected to wind up and dissolve.
   (2) If the election was made by the vote of members alone, the
number of votes for the election and that the election was made by
persons holding at least a majority of the voting power.
   (3) If the certificate is executed by a member or members, that
the subscribing person or persons were authorized to execute the
certificate by persons representing at least a majority of the voting
power.
   (4) If the election was made by the board pursuant to subdivision
(b) of Section 12630, the certificate shall also set forth the
circumstances showing the corporation to be within one of the
categories described in that subdivision.
   (c) If an election to dissolve made pursuant to subdivision (a) of
Section 12630 is made by the vote of all the members of a
corporation with members or by all members of the board of a
corporation without members and a statement to that effect is added
to the certificate of dissolution pursuant to Section 12631, the
separate filing of the certificate of election pursuant to this
section is not required.
  SEC. 32.  Section 12662 of the Corporations Code is amended to
read:
   12662.  (a) (1) Causes of action against a dissolved corporation,
whether arising before or after the dissolution of the corporation,
may be enforced against any of the following:
   (A) Against the dissolved corporation, to the extent of its
undistributed assets; including, without limitation, any insurance
assets held by the corporation that may be available to satisfy
claims.
   (B) If any of the assets of the dissolved corporation have been
distributed to other persons, against those persons to the extent of
their pro rata share of the claim or to the extent of the corporate
assets distributed to them upon dissolution of the corporation,
whichever is less.
   The total liability of a person under this section may not exceed
the total amount of assets of the dissolved corporation distributed
to that person upon dissolution of the corporation.
   (2) Except as set forth in subdivision (c), all causes of action
against a person to whom assets were distributed arising under this
section are extinguished unless the claimant commences a proceeding
to enforce the cause of action against that person prior to the
earlier of the following:
   (A) The expiration of the statute of limitations applicable to the
cause of action.
   (B) Four years after the effective date of the dissolution of the
corporation.
   (3) As a matter of procedure only, and not for purposes of
determining liability, persons to whom assets of a dissolved
corporation are distributed may be sued in the name of the
corporation upon any cause of action against the corporation.  This
section does not affect the rights of the corporation or its
creditors under Section 2009, or the rights, if any, of creditors
under the Uniform Fraudulent Transfer Act, which may arise against
persons to whom such assets are distributed.
   This subdivision applies to corporations dissolved on or after
January 1, 2000.  Corporations dissolved prior to that date are
subject to the law in effect prior to that date.
   (b) Summons or other process against a dissolved corporation may
be served by delivering a copy thereof to an officer, director or
person having charge of its assets or, if that person cannot be
found, to any agent upon whom process might be served at the time of
dissolution.  If none of these persons can be found with due
diligence and it is so shown by affidavit to the satisfaction of the
court, then the court may make an order that summons or other process
be served upon the dissolved corporation by personally delivering a
copy thereof, together with a copy of the order, to the Secretary of
State or an assistant or deputy secretary of state.
   (c) Every dissolved corporation shall survive and continue to
exist indefinitely for the purpose of being sued in any quiet title
action.  Any judgment rendered in any quiet title action shall bind
each and all of its members or other persons having any equity or
other interest in that corporation, to the extent of their interest
therein, and that action shall have the same force and effect as an
action brought under the provisions of Sections 410.50 and 410.60 of
the Code of Civil Procedure.  Service of summons or other process in
any quiet title action may be made as provided in Chapter 4
(commencing with Section 413.10) of Title 5 of Part 2 of the Code of
Civil Procedure or as provided in subdivision (b).
   (d) Upon receipt of that process and the fee therefor, the
Secretary of State forthwith shall give notice to the corporation as
provided in Section 1702.
